Financial Condition
Parent Level
General.
In general, we follow a policy of maintaining a relatively liquid financial condition at our unrestricted holding companies.
This policy has permitted us to expand our operations through internal growth at our subsidiaries and through acquisitions of, or substantial investments in, operating companies. As of December 31, 2018, we held total marketable securities and
cash of $1,122.3 million, compared with $1,383.4 million as of December 31, 2017. The decrease in 2018 primarily reflects depreciation in the value of our equity securities portfolio held at the holding company level, a special
dividend on our common stock and repurchases of shares of our common stock, each as discussed below, as well as contributions to Alleghany Capital to fund the acquisitions of Concord and Hirschfeld, partially offset by the receipt of dividends from
TransRe, RSUI and certain Alleghany Capital subsidiaries. The $1,122.3 million is comprised of $352.1 million at the Alleghany parent company, $714.4 million at AIHL and $55.8 million at the TransRe holding company. We also hold
certain
non-marketable
investments at our unrestricted holding companies. We believe that we have and will have adequate internally generated funds, cash resources and unused credit facilities to provide for
the currently foreseeable needs of our business, and we had no material commitments for capital expenditures as of December 31, 2018.
Stockholders equity attributable to Alleghany stockholders was approximately $7.7 billion as of December 31, 2018, compared
with approximately $8.5 billion as of December 31, 2017. The decrease in stockholders equity in 2018 primarily reflects depreciation in the value of our debt securities portfolio due to an increase in interest rates and credit
spreads in 2018, as well as a special dividend on our common stock and repurchases of our common stock, all as discussed below, partially offset by net earnings. As of December 31, 2018, we had 14,576,509 shares of our common stock outstanding,
compared with 15,390,500 shares of our common stock outstanding as of December 31, 2017.
Sale of Subsidiary
. On
December 31, 2017, AIHL sold PacificComp to CopperPoint for total cash consideration of approximately $158 million, at which time: (i) approximately $442 million of PacificComp assets, consisting primarily of debt securities, and
approximately $316 million of PacificComp liabilities, consisting primarily of loss and LAE reserves, were transferred; and (ii) AIHL recorded an
after-tax
gain of approximately $16 million,
which included a tax benefit. In connection with the transaction, AIHL Re provides adverse development reinsurance coverage on PacificComps
pre-acquisition
claims, subject to certain terms and
conditions. AIHL Res obligations, which are guaranteed by Alleghany, are subject to an aggregate limit of $150.0 million and a final commutation and settlement as of December 31, 2024.
Debt
. On September 9, 2014, we completed a public offering of $300.0 million aggregate principal amount of our 4.90% senior
notes due on September 15, 2044, or the 2044 Senior Notes. The 2044 Senior Notes are unsecured and unsubordinated general obligations of Alleghany. Interest on the 2044 Senior Notes is payable semi-annually on March 15 and
September 15 of each year. The terms of the 2044 Senior Notes permit redemption prior to their maturity. The indenture under which the 2044 Senior Notes were issued contains covenants that impose conditions on our ability to create liens on, or
engage in sales of, the capital stock of AIHL, TransRe or RSUI. The 2044 Senior Notes were issued at approximately 99.3 percent of par, resulting in proceeds after underwriting discount, commissions and other expenses of $294.3 million and
an effective yield of approximately 5.0 percent.
On June 26, 2012, we completed a public offering of $400.0 million
aggregate principal amount of our 4.95% senior notes due on June 27, 2022, or the 2022 Senior Notes. The 2022 Senior Notes are unsecured and unsubordinated general obligations of Alleghany. Interest on the 2022 Senior Notes is
payable semi-annually on June 27 and December 27 of each year. The terms of the 2022 Senior Notes permit redemption prior to their maturity. The indenture under which the 2022 Senior Notes were issued contains covenants that impose
conditions on our ability to create liens on, or engage in sales of, the capital stock of AIHL, TransRe or RSUI. The 2022 Senior Notes were issued at approximately 99.9 percent of par, resulting in proceeds after underwriting discount,
commissions and other expenses of $396.0 million and an effective yield of approximately 5.05 percent.
On September 20,
2010, we completed a public offering of $300.0 million aggregate principal amount of our 5.625% senior notes due on September 15, 2020, or the 2020 Senior Notes. The 2020 Senior Notes are unsecured and unsubordinated general
obligations of Alleghany. Interest on the 2020 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The terms of the 2020 Senior Notes permit redemption prior to their maturity. The indenture under which the
2020 Senior Notes were issued contains covenants that impose conditions on our ability to create liens on, or engage in sales of, the capital stock of AIHL, TransRe or RSUI. The 2020 Senior Notes were issued at approximately 99.6 percent of
par, resulting in proceeds after underwriting discount, commissions and other expenses of $298.9 million and an effective yield of approximately 5.67 percent.
On April 13, 2015, S&P upgraded Alleghanys issuer credit rating to BBB+ from BBB, on January 27, 2016, Moodys
upgraded Alleghanys issuer credit ratings to Baa1 from Baa2 and on August 19, 2016, A.M. Best upgraded Alleghanys issuer credit rating to
a-
from bbb+.
Credit Agreement
. On July 31, 2017, we entered into a five-year credit agreement, or the Credit Agreement, with certain
lenders party thereto, which provides for an unsecured revolving credit facility in an aggregate principal amount of up to $300.0 million. The credit facility is scheduled to expire on July 31, 2022, unless earlier terminated. Borrowings
under the Credit Agreement will be available for working capital and general corporate purposes, including permitted acquisitions and repurchases of Common Stock. Borrowings under the Credit Agreement bear a floating rate of interest based in part
on our credit rating, among other
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